CERTIFICATION OF ENROLLMENT

SUBSTITUTE HOUSE BILL 2031

Chapter 179, Laws of 2002

57th Legislature

2002 Regular Session

TAXATION--PAYPHONE SERVICES

EFFECTIVE DATE: 7/1/02

Passed by the House February 15, 2002

Yeas 98 Nays 0

FRANK CHOPP

Speaker of the House of Representatives

Passed by the Senate March 8, 2002

Yeas 42 Nays 5

CERTIFICATE

I, Cynthia Zehnder, Chief Clerk of the House of Representatives of the State of Washington, do hereby certify that the attached is SUBSTITUTE HOUSE BILL 2031 as passed by the House of Representatives and the Senate on the dates hereon set forth.

CYNTHIA ZEHNDER

Chief Clerk

BRAD OWEN

President of the Senate

Approved March 27, 2002

FILED

March 27, 2002 - 8:59 a.m.

GARY LOCKE

Governor of the State of Washington

Secretary of State

State of Washington

AN ACT Relating to limiting the taxation of payphone services; amending RCW 35.21.710, 35.21.712, 35A.82.050, and 35A.82.055; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 35.21.710 and 1983 2nd ex.s. c 3 s 33 are each amended to read as follows:

Any city which imposes a license fee or tax upon business activities consisting of the making of retail sales of tangible personal property which are measured by gross receipts or gross income from such sales, shall impose such tax at a single uniform rate upon all such business activities. The taxing authority granted to cities for taxes upon business activities measured by gross receipts or gross income from sales shall not exceed a rate of .0020; except that any city with an adopted ordinance at a higher rate, as of January 1, 1982 shall be limited to a maximum increase of ten percent of the January 1982 rate, not to exceed an annual incremental increase of two percent of current rate: PROVIDED, That any adopted ordinance which classifies according to different types of business or services shall be subject to both the ten percent and the two percent annual incremental increase limitation on each tax rate: PROVIDED FURTHER, That all surtaxes on business and occupation classifications in effect as of January 1, 1982, shall expire no later than December 31, 1982, or by expiration date established by local ordinance. Cities which impose a license fee or tax upon business activities consisting of the making of retail sales of tangible personal property which are measured by gross receipts or gross income from such sales shall be required to submit an annual report to the state auditor identifying the rate established and the revenues received from each fee or tax. This section shall not apply to any business activities subject to the tax imposed by chapter 82.16 RCW. For purposes of this section, the providing to consumers of competitive telephone service, as defined in RCW 82.04.065, or the providing of payphone service, shall be ((~~deemed to be the~~)) subject to tax at the same rate as business activities consisting of the making of retail sales of tangible personal property. As used in this section, "payphone service" means making telephone service available to the public on a fee-per-call basis, independent of any other commercial transaction, for the purpose of making telephone calls, when the telephone can only be activated by inserting coins, calling collect, using a calling card or credit card, or dialing a toll-free number, and the provider of the service owns or leases the telephone equipment but does not own the telephone line providing the service to that equipment and has no affiliation with the owner of the telephone line.

Sec. 2. RCW 35.21.712 and 1983 2nd ex.s. c 3 s 35 are each amended to read as follows:

Any city which imposes a license fee or tax upon the business activity of engaging in the telephone business, as defined in RCW 82.04.065, which is measured by gross receipts or gross income from the business shall impose the tax at a uniform rate on all persons engaged in the telephone business in the city.

This section does not apply to the providing of competitive telephone service as defined in RCW 82.04.065 or to the providing of payphone service as defined in RCW 35.21.710.

Sec. 3. RCW 35A.82.050 and 1983 2nd ex.s. c 3 s 34 are each amended to read as follows:

Any code city which imposes a license fee or tax upon business activities consisting of the making of retail sales of tangible personal property which are measured by gross receipts or gross income from such sales, shall impose such tax at a single uniform rate upon all such business activities. This section shall not apply to any business activities subject to the tax imposed by chapter 82.16 RCW. For purposes of this section, the providing to consumers of competitive telephone service, as defined in RCW 82.04.065, or the providing of payphone service as defined in RCW 35.21.710, shall be ((~~deemed to be the~~)) subject to tax at the same rate as business activities consisting of the making of retail sales of tangible personal property.

Sec. 4. RCW 35A.82.055 and 1983 2nd ex.s. c 3 s 36 are each amended to read as follows:

Any code city which imposes a license fee or tax upon the business activity of engaging in the telephone business, as defined in RCW 82.04.065, which is measured by gross receipts or gross income from the business shall impose the tax at a uniform rate on all persons engaged in the telephone business in the code city.

This section does not apply to the providing of competitive telephone service as defined in RCW 82.04.065 or to the providing of payphone service as defined in RCW 35.21.710.

NEW SECTION. Sec. 5. This act takes effect July 1, 2002.